Equity Risk Premium Turns Negative as 10-Year Yield Hits 5.28%

S&P 500 forward earnings yield (5.26%) now trails the 10-year Treasury (5.28%) because rates rose faster than earnings estimates.

By Dorian

The S&P 500 trades at 19.0 times forward earnings, a forward earnings yield of 5.26%.

The 10-year Treasury closed Friday at 5.28%.

Buying the index this week means accepting equity risk for a starting yield two basis points below the 10-year, and bank earnings on October 13 will show whether estimates can keep rising fast enough to justify that.